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Budget

As hardworking Americans file their taxes today, it’s a good time to be reminded of how ordinary taxpayers pick up the tab for loopholes in our tax laws. NJPIRG was joined today by Congressman Frank Pallone, Jr. (NJ-6), Geetha Jayaraman, owner of Grab ‘Em Snacks and member of the Main Street Alliance, and Rutgers students to release a new study which revealed that the average New Jersey taxpayer in 2013 would have to shoulder an extra $1,560 in taxes to make up for the revenue lost due to the use of offshore tax havens by corporations and wealthy individuals. New Jerseyans’ extra tax burden is the eighth highest in the nation.

Every year, corporations and wealthy individuals use complicated gimmicks to shift U.S. earnings to subsidiaries in offshore tax havens – countries with minimal or no taxes – in order to reduce their state and federal income tax liability by billions of dollars. Tax haven abusers benefit from America’s markets, public infrastructure, educated workforce, security and rule of law – all supported in one way or another by tax dollars – but they avoid paying for these benefits. Instead, ordinary taxpayers end up picking up the tab, either in the form of higher taxes, cuts to public spending priorities, or increases to the federal debt.

New Jersey received a C+ when it comes to government spending transparency, according to “Following the Money 2014: How the 50 States Rate in Providing Online Access to Government Spending Data,” the fifth annual report of its kind by the New Jersey Public Interest Research Group Law & Policy Center (NJPIRG LPC).

This report, NJPIRG LPC’s fifth annual evaluation of state transparency websites, finds that states are making progress toward comprehensive, one-stop, one-click transparency and accountability for state government spending. Over the past year, new states have opened the books on public spending and several states have adopted new practices to further expand citizens’ access to critical spending information. Many states, however, still have a long way to go to provide taxpayers with the information they need to ensure that government is spending their money effectively.

New Jersey taxpayers could save $59.8 million from a simple reform to crack down on offshore tax dodging, according to a new report released today by the NJPIRG Law & Policy Center. The reform, which has already been proven effective in Montana and passed in Oregon, would require companies to treat profits booked to notorious tax havens as domestic taxable income.

Many large U.S.-based multinational corporations avoid paying U.S. taxes by using accounting tricks to make profits made in America appear to be generated in offshore tax havens – countries with minimal or no taxes. By booking profits to subsidiaries registered in tax havens, multinational corporations are able to avoid an estimated $90 billion in federal income taxes each year. These subsidiaries are often shell companies with few, if any employees, and which engage in little to no real business activity.

Federal subsidies for commodity crops are subsidizing junk food additives like high-fructose corn syrup, at a rate that would buy 20 Twinkies for each taxpayer every year, according to NJPIRG's new report, “Apples to Twinkies 2013: Comparing Taxpayer Subsidies for Fresh Produce and Junk Food.”

At a time when America faces high obesity rates and tough federal budget choices, taxpayer dollars are funding the production of junk food ingredients. Since 1995, the government has spent $292.5 billion on agricultural subsidies, $19.2 billion of which have subsidized corn- and soy-derived junk food ingredients. These subsidies are all the more egregious at a time when America is facing an obesity epidemic. Children are three times more likely to be obese than their counterparts three decades ago. With over 31 percent of the adolescent population now overweight or obese, and estimates of obesity-related medical costs reaching $150 billion per year, it is absurd that the federal government continues to finance the production of sweeteners and oil additives.

The concentrated distribution of subsidypayments further demonstrates how the current system fails to appropriately direct federal dollars. The system disproportionately benefits larger commodity cropproducers, sending tax subsidies to large, already-profitable players. These subsidies also do not fund all crops equally. Apples, the only fruit or vegetable to receive significant federal subsidies, garnered only $689 million over the same period. Had these subsidies gone directly to America’s 146 million taxpayers, the apple subsidies would enable each taxpayer to buy half an apple each year—but the annual junk food subsidies would add up to nearly 20 Twinkies each.

Key findings:

Of the total $292.5 billion allotted in agriculture subsidies, 3.8 percent of farmers collected $178.5 billion, while 62 percent of farms did not receive any federal funds.

Taxpayers spent $84.4 billion on corn production, $8.1 billion of which funded production of corn starch and sweeteners. Of the total domestic corn produced, 9.6 percent ended up in junk food and beverages as sweeteners or thickeners.

With the money used to subsidize corn and soy junk food ingredients, the government could buy almost 52 billion Twinkies—enough to circle the Earth 132 times when placed end to end, or meet the caloric needs of the entire U.S. population for 12 days.